General Atomic Co. v. Felter
Opinion of the Court
The petition for a writ of certiorari is granted.
General Atomic Co. (GAC) challenges the validity of an injunction issued by a New Mexico state court restraining it from filing and prosecuting actions against United Nuclear Corp. (UNC) in federal court. We reverse because under Donovan v. Dallas, 377 U. S. 408 (1964), it is not within the power of state courts to bar litigants from filing and prosecuting in personam actions in the federal courts.
The state-court injunction was issued in connection with one of several lawsuits arising from contracts entered into by UNC and various utility companies providing for the supply by UNC of uranium. GAC subsequently succeeded to UNC’s rights and obligations under the utility contracts and, pursuant to a 1973 agreement, UNC became obligated to supply GAC with uranium required under the utility contracts. As the result of a more than fivefold increase in the price of uranium between 1973 and mid-1975, UNC stopped delivery of the uranium and in August 1975 filed a declaratory judgment action in the District Court of Santa Fe County, N. M.,
On March 15, 1976, UNC, after being warned by I&M that GAC might attempt to implead it in the Southern District of New York action, obtained ex parte from the Santa Fe court a
In Donovan v. Dallas, supra, a plaintiff class sought an injunction against construction of an airport runway and issuance of municipal bonds for that purpose. After losing in state court and exhausting their appeals, many of the named plaintiffs together with a group of new plaintiffs filed an action in United States District Court raising Issues substantially identical to those already litigated in the state action and seeking similar relief. The city of Dallas moved to dismiss the federal action and, as the result of a favorable judgment in the Texas Supreme Court, obtained an injunction from the Texas Court of Civil Appeals prohibiting all members of the original class from further prosecution of the pending federal action and from “ 'filing or instituting . . . any further litigation, lawsuits or actions in any court, the purpose of which is to contest the validity of the airport revenue bonds ....’”
The New Mexico Supreme Court clearly erred in concluding that Donovan precludes state courts only from enjoining litigants from proceeding further with federal suits in which jurisdiction has already attached at the time of the issuance of the injunction but permits state-court injunctions against additional suits in federal court. In Donovan, the Texas Supreme Court not only ordered an injunction against further prosecution of the then-pending federal case but, because “[t]here is indication in the history of this matter that it has reached the point of vexatious and harassing litigation,” also authorized the Court of Civil Appeals to enjoin the filing of additional suits if it concluded that such suits “may be filed.”
We also reject the New Mexico Supreme Court's attempt to distinguish Donovan on the ground that GAC was currently proceeding in federal court
There is even less basis for the injunction in this case. Here there is no final state-court judgment, since UNO's original action against GAC in the Santa Fe court has not yet been tried. In addition, GAC's opportunity to fairly litigate the various claims arising from this complex action would be substantially prejudiced if the injunction were allowed to
The judgment of the New Mexico Supreme Court is reversed, and the case is remanded to that court for further proceedings not inconsistent with this opinion.
It is so ordered.
After one of the defendants removed the entire case to the United States District Court for the District of New Mexico under 28 U. S. C. § 1441 (c), UNC on December 31, 1975, took a voluntary nonsuit as of right pursuant to Fed. Rule Civ. Proc. 41 (a) (1) (i). The same day UNC instituted a new action virtually identical to the previous one, except that it named only GAC as a defendant.
The Tenth Circuit affirmed the dismissal on April 8, 1977. General Atomic Co. v. Duke Power Co., 553 F. 2d 53. On January 23, 1976, Gulf Oil Corp., one of GAC's constituent partners, had filed a declaratory judgment action in the United States District Court for the District of New Mexico concerning the validity of a release by UNC of certain claims against it. The action was dismissed on September 29, 1976, on the ground that the issue presented could be decided in the litigation pending in the Santa Fe court.
Pet. for Cert. 9-10. UNC had originally applied for a temporary restraining order on January 19, 1976, in the Santa Fe court to prevent GAC from instituting any additional suits against UNC. This motion was denied.
“IT IS THEREFORE ORDERED that General Atomic Company, its partners, privies, agents, servants and employees, are hereby preliminarily enjoined and prohibited from filing or prosecuting any other action or actions against United Nuclear Corporation in any other forum relating to any rights, claims or the subject matter of this action. This injunction prohibits the institution or prosecution of ordinary litigation, third party proceedings, cross-claims, arbitration proceedings or any other method or manner of instituting or prosecuting actions, claims or demands relating to the subject matter of this lawsuit, or including United Nuclear Corporation as a party thereto. However, the case of Gulf Oil Corporation v. United Nuclear Corporation, Civil Cause No. 76-032-B, currently pending in the United States District Court for the District of New Mexico, is excepted from the operation of this preliminary injunction, as is the appeal currently pending before the Tenth Circuit Court of Appeals in General Atomic Co. v. Duke Power Company, et al., No. 76-1152. The injunction herein against defendant shall bind Plaintiff to the same terms.” App. to Pet. for Cert. 3a-4a.
90 N. M. 120, 560 P. 2d 541 (1977).
Id., at 123, 560 P. 2d, at 544.
Id., at 124, 560 P. 2d, at 545. This statement is not factually accurate. See n. 11, infra.
Dallas v. Dixon, 365 S. W. 2d 919, 927 (1963).
377 U. S., at 410-411; Dallas v. Brown, 368 S. W. 2d 240 (Tex. Civ. App. 1963).
The New Mexico Supreme Court apparently ignored the fact that both of the federal actions exempted from the injunction had been dismissed long before the issuance of its opinion. Indeed, the interpleader action was dismissed prior to the issuance of the injunction. See supra, at 13, and n. 2.
As a result of the injunction, GAC was even prevented from implead-ing UNC in the Southern District of New York action instituted by I&M against GAC prior to its issuance. GAC did subsequently succeed in obtaining the dismissal of this action pursuant to Fed. Rule Civ. Proc. 19 on the ground that UNC was a necessary party which could not be joined because of the injunction, but only at the price of surrendering its right to litigate its disputes with I&M in a federal forum. Indiana & Michigan Electric Co. v. Gulf Oil Corp., 76 Civ. 881 (SDNY Jan. 5, 1977). The injunction has also prevented GAC from asserting claims against UNC under the arbitration provision of the 1973 uranium supply agreement in the pending arbitration proceeding instituted against GAC and UNC by Commonwealth Edison prior to its issuance, even though the District Court granted Commonwealth’s demand for arbitration and the Seventh Circuit has affirmed. Commonwealth Edison Co. v. Gulf Oil Corp., 400 F. Supp. 888 (ND Ill. 1976), aff’d, 541 F. 2d 1263 (1976). In addition, the Western District of North Carolina federal court has refused to stay arbitration between Duke and GAC in a proceeding also instituted prior to the injunction, despite GAC’s contention that UNC was an indispensable party to any such arbitration proceeding which it was prevented from impleading by the injunction. The court acknowledged, however, that UNC would be a proper party to the proceeding. General Atomic Co. v. Duke Power Co., 420 F. Supp. 215 (1976).
As the Tenth Circuit recognized in General Atomic Co.v. Duke Power Co., 553 F. 2d, at 56, 58, GAC is exposed to a substantial risk of inconsistent adjudications in separate proceedings. For example, GAC fears that the arbitrators may find that GAC is obligated to deliver uranium to Commonwealth at the contract prices, while the Santa Fe court may hold, on the contrary, that GAC is not so obligated and excuse UNC from performance to GAC on the ground that its obligations are contingent upon GAC’s contractual obligations to Commonwealth. Pet. for Cert. 20-22.
9 U. S. C. § 2 et seq. It is impossible, of course, to foresee all the occasions during the course of this complex litigation in which GAC would justifiably assert claims in federal proceedings.
Dissenting Opinion
dissenting.
The Court holds that a state court lacks the power to enjoin persons subject to its jurisdiction from initiating duplicative and vexatious litigation in the federal courts, litigation which had not been commenced at the time of the state-court injunction. While this conclusion is arguably supported by a portion of the holding of Donovan v. Dallas, 377 U. S. 408 (1964), it is in many ways contrary to the reasoning of that decision, and undermines the historic power of courts of equity to guard against abuse of judicial proceedings. Because Donovan involves a procedural rule which has application in myriad situations, I believe that its holding should be in part re-examined.
In Swift & Co. v. Wickham, 382 U. S. 111, 116 (1965), the Court said:
“Unless inexorably commanded by statute, a procedural principle of this importance should not be kept on the books in the name of stare decisis once it is proved to be unworkable in practice; the mischievous consequences to litigants and courts alike from the perpetuation of an unworkable rule are too great.”
The author of Donovan was particularly cognizant of the sensitive relationship between state and federal courts. See
The Court in Donovan based its decision on the “general rule” that “state and federal courts would not interfere with or try to restrain each other’s proceedings.” 377 U. S., at 412. Such a general rule of parity implies that, where a federal district court has power to enjoin the institution of proceedings in state court, a state court must have a similar power to forbid the initiation of vexatious litigation in federal court.
Congress, in enacting the Anti-Injunction Act limiting the authority of United States courts to stay proceedings in any court of a State, 28 U. S. C. § 2283, excepted from the limitation an injunction “where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” See Mitchum v. Foster, 407 U. S. 225, 231-236 (1972); Atlantic Coast Line, supra, at 294-296. Cf. Kline v. Burke Constr. Co., 260 U. S. 226 (1922). If Congress saw fit to create such an exception to the “ [1] egislative policy [which] is here expressed in a clear-cut prohibition,” Clothing Workers v. Richman Bros. Co., 348 U. S. 511, 516 (1955), it could not have intended to deny the same limited injunctive authority to state courts of general jurisdiction. Neither the Supremacy Clause of Art. VI of the Constitution or the congressional grants of jurisdiction to federal courts in any way militate against the conclusion that both state and federal courts possess the authority to protect jurisdiction which they have acquired from being undercut or nullified by suits later instituted in the courts of the other jurisdiction.
Unlike the Texas Court of Civil Appeals in Donovan, the New Mexico District Court in this case enjoined only the initiation of new proceedings, specifically excepting two federal-court actions already begun by petitioner and its constituent partners. Any ambiguity inherent in the wording of the
The Supreme Court of New Mexico has acted consistently with both the holding and the reasoning of Donovan, and I would therefore affirm its judgment.
Reference
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